Migrant groups are urging Prime Minister Scott Morrison to move carefully to stop the entry of temporary workers and encourage newcomers to settle outside major cities.
Mr. Morrison has also suggested that there might be a case to reduce the number of foreign students who will come to certain universities, as it faces the growing population growth in Sydney and Melbourne.
Carla Wilshire, of the Australian Migration Council, says there are enormous benefits to regional resettlement for individuals and communities.
"However, it is critical that we have the necessary social infrastructure invested in these regional locations," Ms. Wilshire told AAP on Sunday.
"We must also remember that many temporary workers who are establishing themselves in metropolitan areas are doing so because they have specific skills or qualifications that are vital to build the economy of the future."
Ms. Wilshire urged the prime minister to maintain a long-term vision and consider the size of the population that Australia needs to compete on a global scale.
For months, the government has been floating the idea of encouraging migrants to settle in regional areas, but has not yet explained how, given that all permanent migrants can move freely wherever they wish.
An idea is a point-based system to accelerate temporary workers going to smaller cities or regions.
Mary Patetsos, of the Councils of the Federation of Ethnic Communities of Australia, says that workers overseas already occupy key positions in rural and regional areas, as well as in major cities where locals can not be recruited.
"They are fundamental to Australia's economy and society: caring for our elderly and disabled, supporting our country's agricultural sector and growing Australia's IT and high-tech businesses," Patetsos told AAP.
"Any policy that encourages migration to the regions should be transparent and fair and protect immigrants from exploitation."
Labor legislator Andrew Leigh is not sure how the Prime Minister's "thought bubble" would work.
"Yes, we need to get our mix of correct migration, but currently it is true that you get additional points for having studied in a regional area," said Dr. Leigh.
"The Department of the Interior says that you can not force people to live in particular cities, so let's wait and see where this really goes with this."